distant ones. The third possibility maintains that all shocks, recent and distant,
are of equal potential importance.^42 The upshot of this third cosmology is
that there is not one long destination, or no long-run destination, but many.
To give a simple illustration of this third cosmology: suppose that it would
have been better (that is, less costly) to have established initial European
settlement at Newcastle (Australia) rather Sydney. Nevertheless, once Sydney
had become established, it may well have remained rational to persist with
Sydney as the centre. Sydney became a‘rational custom’by virtue of being
established. Yet if some shock did move the metropolitan centre to Newcastle
(or Jervis Bay, etc.), that new fact on the ground would be the (new) rational
custom. A very similar, if less hypothetical, example involves Canberra.
Inclement, remote, and costly, its choice of location as a national capital
may have been inferior to a locale that was mild, easily accessible, and
cheap. But, once established, it was rational to stick with it.^43
The point works the commonplace that, if a wrong fork in the road is taken,
once taken it may still be rational to hasten further along it, rather than retrace
the path. Decisions become‘fate full’. The choice of political borders, for
example, has afinality and rationally so. The Victoria–NSW border along the
Murray may have been an ill-starred choice. But having been adapted to, it is
not worth changing it. But if it was changed, it may not be worth changing it
back. The decision to detach the Northern Territory from South Australia may
have the same property, or the Australian Capital Territory’s acquisition of
self-government.
This model of‘rational custom’is evidently one of an outlay that is‘sunk’
and that cannot be recovered. Thus, the fuel spent in taking one fork in the
road a certain distance is sunk, and cannot be recovered. But sunk costs are not
the only source of‘rational custom’. Rational discouragements to revise a past
decision also arise where, to pursue the travel analogy, the very act of reversing
course is costly of fuel. These‘revision costs’obviously include any resources
consumed in deciding to revise an earlier decision. And revision costs extend
beyond such‘process costs’of revising an earlier decision, to include any
opportunity costs of deciding to revise (for deciding to revise X may entail
not making a decision to revise Y).
The joint upshot of sunk costs and process costs is that it may be rational
to choose the customary action/event/location.^44 This notion of‘rational
(^42) History as random walk: if Yt+1=Yt+utthen Yt+1=ut+ut 1 +...
By contrast, if Yt+1=aYt+utand a > 1 then the more distant the shock, the more important it is. If
Yt+1 43 =aYt+utand a < 1,then the more distant the shock, the less important it is.
Notoriously, it would have been better for NSW to adopt a 5 ft 3 in railway gauge in 1853. But
once a certain length of track had been built, it was rational to persist with extending the gauge. 44
Itmaybe rational to choose the customary, but it need not be: it may eventually prove
rational to no longer choose it. Thus, to pursue the analogy of the site of the capital; if, over the
next two hundred years, the location of the population shifts to the north, the costs of using
Theories of Australian Exceptionalism